Pakistan Reaffirms Commitment to Continue with Reform Plan: IMF May Provide $450 Million in Coming Days

Source:

brecorder.com

Source Date:

Saturday, September 04, 2010

Focus:

Thematic Website

Country:

Pakistan

Created:

Sep 05, 2010

ISLAMABAD (September 04 2010): Pakistan has reaffirmed its commitment with the International Monetary Fund (IMF) to continue with the economic reform program, including fiscal austerity, reforms in tax structure, domestic resource mobilisation, reform of governance structures, including public sector corporations and an enabling environment for the private sector.

In the transcript of a press conference with Dominique Strauss-Kahn, IMF Managing Director, and Dr Abdul Hafeez Shaikh, available on the IMF website here on Friday, the Finance Minister has also reaffirmed the commitment of the government of Pakistan towards the economic reform program. Pakistan is committed to that program because that is the way to keep the recovery strong and to get back on the growth trajectory.

The IMF has been a partner and has provided critical support in allowing Pakistan to get back into a stabilisation mode, and the emergency assistance that the managing director has offered will come in very handy at this time of great need.

"And, because of its quick disbursing nature, I think it is particularly relevant for our situation. And even in this time, while we undertake economic reforms which can bring hardships, we will continue with targeted programs for protecting the poor. We want to get back in a situation where we go beyond relief and rescue and to the reconstruction of lives, livelihood, and infrastructure", Hafeez said.

The Finance Minister said that the floods are perhaps the greatest calamity to have struck any country in recent times. "Even in this time, while Pakistan undertakes economic reforms which can bring hardships, we will continue with targeted programs for protecting the poor. We want to get back in a situation where we go beyond relief and rescue and to the reconstruction of lives, livelihood, and infrastructure."

He stated that the IMF emergency assistance would be committed formally and could be disbursed within a couple of weeks, or so. Unlike a lot of pledges which are made in these kinds of situations and take a long time to materialise, the IMF emergency assistance would be committed formally and can be disbursed within a couple weeks or so.

Shaikh said that the IMF disbursement is qualitatively different in that it is a clear additionally as well. It is not simply a recycling of existing money. It's a clear additionally, number one. And number two, it will be disbursed within weeks rather than within an unspecified period of time.

About the status of the aid, he said that there are a variety of methods through which the pledges or commitments are being made. A UN appeal for $460 million for the early recovery period, which is likely to be fulfilled and there is a possibility of another appeal for the next phase. Many countries are donating bilaterally. The global institutions, like the World Bank and the Asian Development Bank combined, they have committed to $3 billion in terms of reorientation of the programs or making their assistance accelerated, in terms of disbursement timing.

"So it's difficult to put a single number because there are a variety of channels, there are a variety of instruments". About relaxation of conditions in terms or timing of the $11 billion program, Dominique Strauss-Kahn said: "We're discussing now how to reorganise the program owing to the new circumstances. What is important is what was decided by the government to improve the economic situation, especially in the tax sector, but in other fields, as well. We've heard from the Pakistan Authorities that they really want to continue with this program.

"Now we will see exactly how it looks during the review; how it looks for the money which already has been disbursed, and the other part of the program and what kind of timing we can have. That will be seen at the time of the review." Dominique Strauss-Kahn said: "What is important today are two things: going on with the program rebuilding the Pakistani economy; and second, creating immediately a possibility for new resources.

Finance minister has stressed the fact that that's really new resources and not recycling of an existing loan. The new resources are going to be disbursed probably in the coming weeks; probably before the end of September. And it is hoped that it will be helpful even if, of course, it's not enough, especially when it will be targeted to actions which have to do with the most vulnerable part of the population in Pakistan."

The IMF Managing Director said that the most important thing is to keep the Pakistani economy back on track. IMF had a successful program working before the floods and we need to go back to this program. "Pakistani authorities clearly have in mind to do so and to go on as much as possible, taking into account the new situation, of course, but to go back to the program we established together. It's needed for the Pakistani economy and it's also a very good signal for the international community to mobilise and be able to provide the needed resources".

Both sides have two main directions for work: one is short-term help and the second thing is to deal with the economic consequences in the medium term of what has happened. As far as the first one is concerned, the IMF will be able to provide $450 million in the coming days. And probably the IMF will be the first agency likely to disburse very rapidly this money which is absolutely needed, IMF Managing Director added.

Pakistan Reaffirms Commitment to Continue with Reform Plan: IMF May Provide $450 Million in Coming Days

Pakistan has reaffirmed its commitment with the International Monetary Fund IMF to continue with the economic reform program including fiscal austerity reforms in tax structure domestic resource mobilisation reform of governance structures including public sector corporations and an enabling environment for the private sector